Global telecom industry takes £31 billion hit due to Covid-19

05 January 2021 Consultancy.uk
Profile
More news on

The Covid-19 pandemic has dented a major blow to the global telecoms industry, wiping off £31 billion in revenues according to a new study from Analysys Mason. While the outlook for 2021 is better, spurred by booming activity in the connectivity and remote working segment, it will take the industry up to 2023 to return to its pre-Covid-19 level.

Analysys Mason’s research found that the industry saw a $43 billion (£31 billion) fall in 2020 when compared to 2019’s figures, representing a 2.7% drop overall. With everyone forced to stay at home for most of the year, revenue from several segments such as roaming, pre-paid, and voice have all sunk.

The pandemic did lead to a stellar rise in connectivity demand, although the income growth wasn’t large enough to offset the other segments. One of the key lessons of 2020’s lockdown months was how critical technology, telecom, media, and entertainment innovation is for business continuity, keeping in touch with friends and family, appreciating new ways to entertain and learn, and taking care of health.

Global telecom industry takes £31 billion hit due to Covid-19

The forecast from Analysys Mason suggests that only around one-third of the revenue lost in 2020 will be recouped in 2021, and that this will not be enough to reduce the ongoing pressure on operators.

Commenting on the situation, Analysys Mason’s Director for Consumer Services, Stephen Sale, said, “A lot of operators will be pleased to start reporting growth from April, but we are expecting pretty gloomy times in 2021.” Coupled with the cessation of many government support schemes which had helped keep in trouble players afloat in 2020, there will likely be a rise in business failures in the sector, he suggested.

Even the last great hope of telecoms is currently on thin ice. The rollout of 5G internet was hampered by the pandemic throughout 2020, meaning most deployments of 5G currently offer only a limited improvement to 4G services. As a result of these delays, a growing body of research suggests that operators may have already reallocated some of the money earmarked for 5G to other areas in the interim – further delaying its deployment, and deepening the crisis going forward.

Analysys Mason analysis backs this up, stating that while 5G was one area that had been put forward as a potential economic saviour in this current climate, unfortunately, this has been overstated. Even with widespread rollouts this year expected to boost both direct average monthly revenue per user (ARPU) and also generate major opportunities with industry, amid the sustained economic crisis the world is enduring, customers remain unwilling to pay a premium for 5G at this time.

As a result, with traditional revenues down and 5G failing to produce the spike in revenue that some operators had hoped, many operators are moving to adapt their business models to encompass broader services. Tom Rebbeck, Head of Operator Services and Internet of Things (IoT) research at Analysys Mason expects one of the major operators to acquire an IoT specialist – looking to emulate Orange.

The French telecom giant already garners 40% of its revenue from IT rather than from traditional telecoms. He explained, “It will probably be an operator that has already invested in IoT. I would expect it to be one of the larger ones.”

However, he added that even with this kind of adaptation, the health of the industry will flounder. This year “gets worse before it gets better,” he remarked, as much of the government funding has kept many companies going dries up. This means potentially that “in 2021 lots of them will be put out of business.”

Telecom companies able to address consumer needs for fast, reliable and safe user experiences underpinned by an agile and digital business model are expected to be well positioned for growth.